HR Workforce Solutions
By Nonprofits, For Nonprofits
In California, where a 10.8 percent unemployment rate is reported with general good feelings, unemployment insurance presents more than one challenge to nonprofits as the state’s UI fund continues to fall deeper into insolvency. With plans to borrow more than $312.6 million from the state Disability Insurance Fund, how will nonprofits remaining in the state UI system counter the hefty bill coming at them?
While there is no good answer, nonprofits which have 10 or more employees are urged to consider leaving the state system to become reimbursing employers who only pay for the costs of the claims submitted by their former employees.
Because the financial recovery continues to trudge along for nonprofits, many of which cannot expect to return to pre-Recession levels of funding for 10 or more years, according to a recent study, it is important that nonprofit leadership continue to successfully assess the options available to them.
Nonprofits: What We’ve Learned
When the state UI fund ran out of money in 2009, during the height of the financial crisis, California had an unemployment rate of 11.3 percent—the fourth highest in the country—and about 1.75 million unemployed workers. Today, the rate remains still high at 10.8 percent.
But many nonprofits made it through the Recession relatively unharmed and in fact were able to raise their hiring 5 percent over a three year span as more help was needed by beneficiaries.
Although a high number of small agencies were forced to close, and many medium-sized agencies had to merge with larger organizations, nonprofits are used to tightening up their belt loops and surviving tough financial times to continue providing benefits to their community.
How can this knowledge be used to help California and other states facing high UI costs?
With the largest unemployment insurance deficit in the nation, cash-strapped California has already borrowed from the state Disability Fund once before, but little is being done to systematically change the way that the state releases funds for UI. (Both loans must be repaid within four years of their initial borrowing date, but no way to repay them has been presented.)
Counter-intuitive though it may be, by removing your nonprofit from the state UI tax system and instead paying only for your own UI claims you allow your agency to do more with the money you have and for the mission you’ve committed to. This action, in a small way, also calls for UI reforms across the nation as more nonprofits leave the state system for the cost savings found in self-reimbursing.
To learn more about how you can leave the state system and become a reimbursing employer, visit www.ChooseUST.org/501c3-unemployment-alternatives/ or sign up for an upcoming webinar.
Summary: Partnership creates potential savings for many nonprofits in the state of Maryland, reports the Unemployment Services Trust.
The Unemployment Services Trust (UST) and Maryland Nonprofits are proud to announce that they are joining forces to work with nonprofit organizations in Maryland to help save money on unemployment expenses.
Maryland Nonprofits is the primary source for guidance and assistance on nonprofit management issues for Maryland’s near 1,600-member nonprofit community. Maryland has 255,408 nonprofit employees within all service areas, including: Arts, Culture & Humanities, Education, Environment & Animals, Health, Human Services, and Public & Societal Benefit. Each year, more than 300,000 nonprofit professionals utilize Maryland Nonprofits’ resources, and now Maryland Nonprofits will be better able to assist its members with the help of UST’s cost-saving program.
Donna Groh, Executive Director of UST stated: “We are so pleased to enter into this partnership with Maryland Nonprofits. UST exists to save money for nonprofits so they can use those funds to advance their missions. Now, more than ever, nonprofit organizations need to maximize their resources and UST will work with Maryland Nonprofits’ members to do just that.”
UST, a national unemployment trust, helps organizations opt-out of their state’s unemployment tax system. Permitted by federal regulation, opting-out allows nonprofits to handle their own unemployment claims, and save money. UST members own their own account, which is a pre-paid asset used to cover unemployment expenses that occur when an unemployment claim is filed by a former employee. The nonprofit becomes a “direct reimbursing employer,” meaning they only pay for unemployment collected by former employees, and are sheltered from rising tax rates. UST offers asset-protection and unemployment claims monitoring that many nonprofits need to safeguard their cash flow from volatile or unwarranted unemployment claims. In addition, UST members benefit from conservative asset investment, stop-loss protection, bonding, and professional human resources support.
UST, founded by nonprofits for nonprofits, is the largest of all national unemployment trusts. Consisting of more than 2,100 member organizations from 47 states (and DC), UST has been helping nonprofits reduce expenses since 1983. UST’s long-standing relationship with nonprofit organizations has provided more than $33 million in refunds to trust members; and an additional $35 million in annual unemployment claim savings, presenting organizations with valuable resources to put toward achieving their missions.
For more information about UST, visit http://www.ChooseUST.org or call (888) 249-4788. You can also visit Maryland Nonprofits on the web at http://www.MarylandNonprofits.org.
Knowing exactly what separation details will be needed in response to the state and having the increased lead time needed to gather that information enables nonprofits to win more claims at the initial level of protest. This is especially important to nonprofit employers where winning claims up-front helps lower claim costs by eliminating benefit payments to former employees while waiting for an unemployment hearing to be scheduled.
Electronic receipt of claims notifications through SIDES also helps reduce follow up time, as a complete response is provided as part of each “first response.”
Ultimately, the program reduces improper payments, since the states are provided with all of the details needed to make the correct ruling in the initial determination. As a result, participation in SIDES saves both time and money.
For nonprofit employers, reducing the high costs associated with unproductive former employees helps increase the funds available to help others and attain organizational goals.
Some of the biggest benefits to nonprofits include:
UST’s claims monitor, TALX, has been involved with SIDES from its inception and is one of only two forward-looking unemployment cost control organizations utilizing the program to help 501(c)(3) members reap the benefits of this improved claims process.The program has been successful, thus far, and TALX is now live with SIDES in 10 states (AZ, CO, GA, IA, OH, RI, SC, TX, UT, WI). An additional 10 states are expected to go live by the end of August, with 21 more going live by the end of the year. There are 9 states that have not yet made a commitment to participating in SIDES.
If you are a UST member, please contact your TALX representative to learn more about SIDES.
By categorizing an organized nonprofit sector to include the number of nonprofits per capita in each community and the degree to which nonprofits directly engage local residents, the study, “Civic Health and Unemployment II: The Case Builds,” presented three key findings:
Further emphasizing the importance of an organized nonprofit community that is involved with those in the local area, the study suggests that while nonprofits directly contribute to a lower unemployment rate by creating jobs, there also appears to be a ripple effect in which organizations that engage with local residents create a change in the local unemployment rate.
Released by the National Conference on Citizenship this study may well become highly influential for those who most often are called upon to discuss the importance of establishing strong nonprofit sectors. And although it doesn’t offer all the answers as to why organized, involved nonprofits are able to directly impact unemployment rates, there will undoubtedly be more information to come in the next few months as the unemployment rate continues to trend downward.
The digital age has created a new outlook on how nonprofits are viewed from the outside world. Technology has allowed the removal of certain limitations in philanthropy—granting more exposure to the public on their efforts as well as allowing these organizations to be more prosperous. Such technological advances have given the sector the ability to improve and expand their outreach to those that are facing problems such as poverty, access to education or those affected by environmental devastations.
Introducing technology advances can benefit your organization in more ways than one. Such benefits will allow your organization to plan ahead, produce content tailored to your audience’s needs and overall create an efficient philanthropy.
Along with the benefits mentioned above, here are a few approaches nonprofits can consider when introducing your organization to new tech elements:
1) Use surveys to better engage your audience. A cost-effective way to gather intel on your biggest supporters is to send out a survey. This will give you the opportunity to gather insight on what messaging should be used to engage your audience and increase your number of donors. Surveys can help you save time by testing your messaging—your supporters can help you refine your messaging approach without wasting time and resources.
2) Create a website that is user experience focused. The design of an organization’s website should be primarily focused on the user’s view and navigation of the site. Displaying a variety of content, such as blogs, eye-catching images, social media posts and videos will allow the user an opportunity to engage with all forms and see which ones they interact with most. Implementing a test user experience can be a simple and cost-effective task that will help identify issues right from the start.
3) Use simple and engaging content to interact with your audience. Any content placed or shared on your social media pages should be directed back to your website. This will continue to increase the number of people that will engage and interact with your site. With a wide variety of social media applications, nonprofits have ample opportunities to increase awareness around the different programs they offer. Also, social media platforms can allow your supporters to share your mission and generate more communication about your organization.
The system is far from perfect though.
For instance, the system is intrinsically flawed for many nonprofit employers who face little to no job-turnover and who remain a part of their state system. Featured in a recent report, the North Carolina UI system has provided one of the strongest examples of why eligible 501(c)(3)’s should consider opting out of their state UI system, as allowed by federal law.
After borrowing more than $2.4 billion from the federal government to meet their UI responsibilities after their UI Trust Fund became insolvent during the Great Recession, North Carolina has begun leveraging their high interest payments on state UI participants.
Like many states which were unable to meet their UI obligations, the burden of reimbursing the federal government for the full loans falls on all employers within the state, whether or not any of their former employees are currently collecting unemployment benefits.
No state reached insolvency overnight though.
Long before the recent recession, states resisted “indexing” or raising their unemployment taxes from year to year. Things were good, the economy was stable — why should they make adjustments? But while employers enjoyed low taxes, in the long run they were being set up for a much bigger fall in the future. And that’s when the Great Recession hit. Not only had states failed to maintain an adequate UI cushion, employers would be double-hit by the recession in having to lay off workers to cut costs, and then pay higher unemployment taxes as a result. According to a 2010 Government Accountability Office report, “Long-standing UI tax policies and practices in many states over 3 decades have eroded trust fund reserves, leaving states in a weak position prior to the recent recession.” Not that states weren’t warned. Even in North Carolina, the Budget and Tax Center reports that it “conducted a thorough analysis of the unemployment insurance system in March 2007, before the start of the Great Recession, warning of the long-term unsustainability of the system as implemented and suggesting reforms.”
More than ever, systems today must be built that can better weather economic downturns and large, prolonged layoffs. Adequate funding levels must be re-attained so that states rely less on the federal government for funding support to meet benefit payments. A system must also be built which maintains its ability to support the economy with wage-replacement levels that are adequate in supporting workers seeking work.
While innovative programs must continue to be introduced to help place jobseekers in new positions, an overhaul of many state UI systems would better support nonprofit employers who remain in their state tax-rated UI system whether they are too small to opt out, or if they feel safer in the state system.
However, because 501(c)(3)s have the exclusive right to opt out of their state UI system in favor of becoming a reimbursing employer that pays directly for former employees’ UI costs, many already experience a greater savings because they aren’t paying for the state’s interest on federal loans, or subsidizing larger employers’ UI costs.
Currently the Colorado Unemployment Insurance Trust Fund has a negative balance of more than $600 million after the recessions of 2002 and 2008.
In a joint announcement by Democratic Gov. John Hickenlooper and Republican state Treasurer Walker Stapleton, the men explained that the bond sale will eliminate additional UI solvency surcharges that Colorado employers have paid since 2004. In the short term, Colorado employers still within the state system will see savings starting next year of up to $120 per worker.
Businesses will repay the bond over time though and can expect fewer savings with each year.
For nonprofit agencies still in the state system, there are other options, such as leaving the state to join a Trust, like the Unemployment Services Trust (UST), that can help save more money and gain greater predictive control over yearly budgeting.
In fact, Colorado nonprofits that leave the state system and join UST save an average of $6,300 a year.
To learn more about your opt out alternatives, visit http://www.chooseust.org/501c3-unemployment-alternatives/ or sign up for an upcoming webinar “Exclusive Nonprofit Savings”.
Read the original MSN Money article here.
Employers added 313,000 jobs in February and the unemployment rate remained unchanged at 4.1 percent making the number of people unemployed the same at 6.7 million.
In February, the number of long-term unemployed was essentially unchanged at 1.4 million which accounts for 20.7 percent of people that are currently unemployed. Overall, the number of long-term unemployed has been down by 369,000 for 2018. With the civilian labor force rising to 806,000, the labor force participation rate also increased by 0.3 percentage point to 60.4 percent in February.
The number of persons employed part time for economic reasons—referred to as involuntary part-time workers was changed slightly at 5.2 million. Also, these individuals, who would have preferred full-time employment, were only working part time due to their hours being cut or not being able to find jobs that offer full-time employment. In addition, the 1.6 million people that were marginally attached to the labor force only changed slightly compared to the year prior. With these individuals not being part of the labor force, they had either been available for work or looking for employment for the past 12 months.
The U.S. economy added over 50,000 jobs in construction, retail trade, professional and business services while Manufacturing increased by 31,000 jobs. Major industries like, wholesale trade, leisure and hospitality, and government showed little change over the course of the month. In February, average hourly earnings rose by 4 cents to $26.75, following a 7-cent gain in January. Over the year, average hourly earnings have increased by 68 cents/2.6 percent. The average hourly earnings of private-sector production and nonsupervisory employees increased by 6 cents to $22.40 in February.
This month’s job report highlights a winning combination of a large increase in job creation and a growing workforce revealing strength in our economy. In addition, the modest wage growth defused concerns that competition for workers was driving up salaries and igniting inflation.
Promotions are the cornerstone of professional growth – they motivate employees by appealing to their sense of ambition. While there are many things organizations can do to improve employee morale, if you don’t have a solid process in place for promoting your staff, you’ll never see their best efforts.
Over the past year, 400,000+ workers were surveyed in the U.S. and the results revealed that when workers believe that promotions are managed effectively, they are two times as likely to work harder and put forth the extra effort required to advance in the workplace. In addition, these same workers said they are also more likely to stay put long-term.
For employers, having a clear promotion policy in place is one of the most powerful ways they can drive their company’s success. The payoff is priceless – employee turnover rates are lower, productivity and morale increases and businesses see revenue growth.
Promotions are extremely personal and should benefit both the employee and the employer – no matter how large or small the company is. Leaders should not focus only on an employees’ qualifications but should also take the time to understand their current role, their interests and career aspirations as well as their weaknesses. You then put yourself in a position to be their top supporter and can advocate on their behalf when an internal opportunity arises. By refocusing your energy on the people the process is meant to support, you can improve the effectiveness of the promotion process itself. Taking ownership of the process and encouraging your staff members to step forward when there is an opportunity, creates a trust between the two of you and ultimately the process.
You want to refrain from promoting your buddy or the guy whose ethics are questionable or promote on the basis of seniority. You’ll only leave the rest of your staff feeling like the truly important things don’t matter like productivity or integrity. They’ll start believing that they need to focus more on developing personal relationships or become lazy thinking they just need to put in the time to gain seniority. Even worse, they’ll think that it doesn’t matter how the work gets done just as long as it gets done making the quality of work less of a priority.
A solid promotions process allows leaders to elevate each employee to their full potential – while showing the company what type of results and behaviors are valued. Promotions are about people so when leaders take a caring approach to coach and advocate for their employees, everyone reaps the benefits.
And, because keeping unemployment costs low is vital to so many agencies across the U.S., we’ve added state-by-state information for taxable wage bases, and a general overview of the unemployment insurance program that applies to all states.
We get a variety of questions related to unemployment tax – also known as unemployment insurance – and encourage nonprofits to be proactive in learning about this system.
What is Unemployment Tax?
>The MDOL provides a helpful overview of the program, and this summary: “Unemployment is an insurance program providing temporary, partial wage replacement to workers who are unemployed through no fault of their own. The program is funded by Unemployment Taxes paid by employers based on the amount of wages paid for covered employment. The Unemployment Tax is paid on the [taxable wage base] an employer pays to an individual in a calendar year.” (Read our overview or see what your state’s taxable wage base is.)
Is Your Nonprofit Liable?
501(c)3 nonprofits are exempt from federal unemployment taxes, but may be liable for state contributions if they meet something called the “4 for 20″ provision. This provision is triggered when four or more individuals are employed on the same day for 20 weeks in a calendar year, though not necessarily for consecutive weeks. It is important to note that who is considered “employed” for these purposes is not always straightforward – see #4 below.
Why You Should Consider Coverage Even If You’re Exempt
While many nonprofits in Maine are very small and potentially exempt, MANP encourages all nonprofits – as a best, ethical practice – to pay into the unemployment tax system or alternative coverage (see #5) to protect their current employees. At the very least, your employees should be made aware of whether or not you provide unemployment coverage. Unemployment compensation is a safeguard for people – and our communities as a whole – against the potential economic and emotional domino effects of losing a job.
Why Independent Contractors May Still Be Considered Employees
There are different rules and tests used by government agencies to determine independent contractor status, because different agencies are responsible for separate aspects of law. For the purposes of unemployment insurance, the Maine Department of Labor uses something called the “ABC test”, which makes it sound simple, but is more complicated when applied to real situations. The ABC Test establishes criteria that an work relationship must meet in order to for the services of that individual to not be considered employment. The three parts of the ABC Test relate to employer control/direction of the worker, place(s) of business or courses of business, and proof that the worker is independently established in the trade. A nonprofit may have to pay unemployment taxes even if IRS or Maine Revenue Services determine that, for income tax purposes, individuals may be independent contractors. Nonprofits should be familiar with this FAQ resource on Independent Contractors, and with this guide about Independent Contractors and the ABC test.
Cost-Saving Alternatives
The Unemployment Services Trust (UST) provides an alternative to paying into the Maine unemployment tax system, and can be a cost-saving option for nonprofits, especially those with more than 10 employees. Through UST, agencies directly reimburse the state only for the claims of their former employees, rather than paying the state unemployment insurance tax which covers all Maine employees. (You didn’t think we’d take this one out, did you?)
This post does not constitute official or legal advice. A version of this article originally appeared on blog.nonprofitmaine.org.
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Further, our website may contain links to other sites. Anytime you connect to another website, their respective privacy policy will apply and UST is not responsible for the privacy practices of others.
This Privacy Policy and the Terms of Use for our site is subject to change.
UST maintains a secure site. This means that information we obtain from you in the process of enrolling is protected and cannot be viewed by others. Information about your agency is provided to our various service providers once you enroll in UST for the purpose of providing you with the best possible service. Your information will never be sold or rented to other entities that are not affiliated with UST. Agencies that are actively enrolled in UST are listed for review by other agencies, UST’s sponsors and potential participants, but no information specific to your agency can be reviewed by anyone not affiliated with UST and not otherwise engaged in providing services to you except as required by law or valid legal process.
Your use of this site and the provision of basic information constitute your consent for UST to use the information supplied.
UST may collect generic information about overall website traffic, and use other analytical information and tools to help us improve our website and provide the best possible information and service. As you browse UST’s website, cookies may also be placed on your computer so that we can better understand what information our visitors are most interested in, and to help direct you to other relevant information. These cookies do not collect personal information such as your name, email, postal address or phone number. To opt out of some of these cookies, click here. If you are a Twitter user, and prefer not to have Twitter ad content tailored to you, learn more here.
Further, our website may contain links to other sites. Anytime you connect to another website, their respective privacy policy will apply and UST is not responsible for the privacy practices of others.
This Privacy Policy and the Terms of Use for our site is subject to change.
A recent Bridgespan Group survey has revealed that most nonprofits rank their ability to provide development and growth opportunities to employees as their fourth greatest management weakness overall even.*
The same survey went on to explain that a lack of employee development has become the “Achilles heel” of the nonprofit community. Because only 30 percent of nonprofits have created or sustained an agency-wide plan for employee development—and only 23 percent of those track its progress—the large majority of organizations don’t have a clear understanding of what skills they need for each position as their mission evolves. Many more don’t even have an idea of where that talent would come from.
To help you develop a plan to address future leadership gaps, Bridgespan put together a list of 52 free ways that nonprofit agencies can improve their internal employee development. Some of the easiet and most impactful employee development initiatives that they list include:
On its own, on-the-job development isn’t enough though. To foster truly effective options for employee and organization development, get your board involved with individual employees through the agency. And have each person who is involved with your development program—whether that is a board member or a developing leader—regularly assess what works best at getting employees ready so that you are more likely and more able to advance them within your agency.
*Rounding out the top 3 are communication of priorities, coordination across organization boundaries, and performance assessment and consequences.